Crypto asset managers have significantly increased their on-chain holdings since early 2025, growing from approximately $1 billion in January to over $4 billion by mid-year. This surge highlights a trend of growing confidence and sophistication among professional investors actively deploying capital within decentralized finance (DeFi) protocols.
Reports from Artemis and Vaults reveal that this growth is driven by several key factors: market recovery following prolonged bearish conditions, the search for attractive yields unavailable in traditional finance, maturing DeFi infrastructure that encourages direct interaction with smart contracts, diversification strategies that leverage various on-chain opportunities, and operational efficiencies in executing complex strategies like yield farming and arbitrage.
Asset managers are utilizing DeFi protocols to lend assets, borrow against collateral, provide liquidity on decentralized exchanges, stake cryptocurrencies, and engage in yield farming. Notable protocols attracting significant capital include Morpho Protocol, Aave, Compound, Uniswap, Curve, Lido, and Yearn Finance. Morpho alone has nearly $2 billion locked from these managers.
The evolution of DeFi is positioning it as an increasingly attractive financial layer, not merely a disruptive or unregulated space. This shift is reflected in institutional adoption trends, particularly as regulatory environments, such as the recent deregulatory stance in the US, enhance confidence. Financial firms, wallets, and exchanges are embedding DeFi tools as backend infrastructure, abstracting complexity and improving capital efficiency and monetization.
However, risks remain substantial. Smart contract vulnerabilities, regulatory uncertainty, market volatility, liquidity challenges, and operational complexities require sophisticated risk management and technical expertise. Despite these challenges, the trend signals a professionalization and long-term institutional interest in blockchain and decentralized finance.
For individual investors, the developments underscore the importance of thorough research, prudent risk management, secure interaction methods, and starting cautiously with DeFi engagements.